How No Cost EMI Works? The No-Cost EMI is a scheme widely offered by major E-commerce giants. With the help of these EMIs retailers are offering no-interest loans or zerointerest loans. By keeping this situation in mind Reserve Bank of India (RBI) stated that the concept of interest-free loan or 0% interest loan is invalid. However many luminous inverter dealers in Chandigarh are offering No-cost EMI smartly. They are definitely not doing illegal things but there are always loopholes in the system. In this blog let’s check how Eureka Forbes dealers in Chandigarh and Samsung refrigerator dealers in Kharar are offering No-Cost EMIs even after they’ve no Authority to provide interest free loans. After the statement of RBI about invalidation of 0% loans, many companies worked on providing the
same benefits in different ways. Accordingly, they discovered two methods. These are: Making discount equal to interest: This way is used by most of the e-commerce stores. Here, the interest on the total amount is treated as a discount. Let’s understand this with an example. Suppose an individual is interested in purchasing a mobile phone of ₹ 10,000. Now after purchasing the option of EMI and choosing the bank, he gets the offered price. As this EMI has a loan structure, a basic interest is applied (let’s assume 10% is applied here). So the total amount is ₹11,000.
Now ₹1000 of interest is subtracted from the total amount and offered as the original price. Here the user gets ₹9000 as original price with 1,000 Interest making a total of ₹10,000. Also, the user has nothing to do with the calculation. At the end of the system, he’s getting the same price as before the interest is applied. However ₹9,000 goes in the bank of the retailer and ₹1,000 goes in the bank of financer. Interest is added as product price: This way is used by small businesses as they cannot afford small losses. Let’s understand the working. Suppose an individual is again purchasing a mobile phone of ₹10,000. Now if 10% Interest rate is applied. The total cost of the phone with interest is ₹11,000. Instead of showing interest to the buyer, the interest fee of ₹1,000 is spread over the product cost in multiple ways. For example, adding a processing fee. Comparing both the No-cost EMI methods, the first one has more Benefits. However, in both cases, the buyer is not paying interest.